Fiscal constraints for cities continue, though the picture is improving. A majority (57%) of city finance officers say they can meet their city’s needs better this year than in FY 2011, according to the National League of Cities (NLC) 2012 City Fiscal Condition report. This is a strong improvement over FY 2009 when NLC found only 11% of finance officers responded that conditions were better than in FY 2008.

 It is, however, the sixth straight year that general fund revenues are projected to fall while expenditures will grow, albeit slightly (0.3%).  Rising costs for health care, pensions, and infrastructure are significant concerns, along with public safety demands.  Many cities continue to squeeze personnel costs through hiring freezes, reducing workforces, reducing or freezing wages, and changing existing health benefits. Some cities are cutting back on infrastructure investments; 21% are reducing human services spending and 25% are reducing spending on parks, recreation, and libraries.  Altogether, there are 650,000 fewer local government jobs now compared to peak levels in 2008, according to the August 2012 employment report from the U.S. Bureau of Labor Statistics.

The report projects ongoing fiscal challenges in 2013 with further declines in property tax revenue as assessments and collections catch up with the current market.